Small businesses have a big opportunity when it comes to using technology to leapfrog their bigger but slower-moving rivals.
When asked about their spending intentions, UK SMEs are three times more likely than major enterprises (49% versus 18%) to increase technology investment, according to research from recruitment company Nash Squared.
Bev White, chief executive at Nash Squared, says small business owners and managers who are alert to the opportunities that digital transformation affords can now exert a much greater influence in markets than ever before.
“In a world that is so interconnected, the playing field is much more level between smaller and larger companies. Both can reach a global audience of customers, employees or potential new hires,” she says.
SMB Group, an analyst firm that looks at tech trends for small businesses, also reports high enthusiasm for IT investment. More than half (54%) of small firms say they intend to increase tech spending.
The analyst says small firms with a digital transformation strategy in place and initiatives underway are three times more likely to have enjoyed an uptick in revenues from 2020 than those with no plans.
Many small firms, therefore, are already seeing positive results from digitization. These SMBs are using core technologies such as the cloud to pivot and capitalize on new opportunities – and that’s crucial in today’s fast-changing global economy, says White.
“The big advantage that smaller companies have is agility; the ability to change and adapt. And in a world where disruption of every kind seems to be coming at us at breakneck speed, the value of agility can never be underestimated.”
Evidence suggests many small business owners do feel their inherent agility gives them an advantage. Twice as many SMEs (23%) as larger corporates (10%) are extremely or very effective at scaling good ideas and stopping poor ideas quickly, reports Nash Squared.
Tina McKenzie, policy and advocacy chair at the Federation of Small Businesses, says her organization has seen clear evidence of SMB agility during the past two years.
“During COVID-19, many businesses with a physical presence adapted and created an online presence which took off, while many individuals also set up ‘side-hustle’ online businesses that have now grown into significant enterprises as people bring new ideas to the digital space.”
What’s more, McKenzie expects this trend to continue. Small business owners have seen the positive benefits that technology and its online platforms afford – and now they want more.
“The digital economy is vital to small businesses – presenting a huge opportunity to reach new markets and customers,” she says.
However, it’s not all good news. Many SMBs face stiff competition, have limited resources and – perhaps most crucially of all – don’t find it easy to invest in technologies that could help them save time and money or innovate and grow.
Laurie McCabe, co-founder and partner at SMB Group, says small firms looking to seize the advantage can face tricky challenges.
“On the one hand, small businesses don’t have the hierarchy and the bureaucracy for decision-making processes, so they can definitely make decisions faster to pivot and try something different and then deploy technology to support that,” she says.
“On the flip side, they don’t have a lot of bandwidth – not just technology bandwidth but process bandwidth. Whenever you need to make a change in a small business, it’s a heavy lift.”
So, while many small firms hold the potential to move quicker than their much larger counterparts, they lack the resources – both in terms of time and money – to make radical and effective digital transformation stick.
The end result of this can be dither and delay, McCabe warns: “A lot of times, they’re just putting transformation off.”
Even once a decision is made to go to the IT market, SMBs can be held up by a mismatch of internal technological expertise with external marketing clout.
Small firms by definition have fewer people to enact or enable change. A lack of dedicated IT resources means technology choices for small businesses must be intuitive, both in terms of how they’re used and the payback they provide for the business.
Unfortunately, evidence suggests clarity around use cases is tough to find. There’s so many vendors pitching solutions that the potential benefits of technology become lost in a cacophony of marketing hyperbole.
“Everything they sell is going to do things faster, easier and cheaper,” says McCabe. “They’re all saying the same thing. As a small business, you have to think about ‘what’s really going to move the needle for me in the areas that I feel bogged down in”https://www.zdnet.com/ article/small-business-tech-how-to-find-the-right-tools-to-boost-your-business/.”
So, what is McCabe’s big lesson for people who are running small businesses and looking to take advantage of digital technology? The answer is simple: focus on core challenges first before even thinking about potential digital solutions.
“What are the things that you really need to do well, that you need insights into, and that you need to go smoothly,” she says. “Then really focus on using technology to support those areas in your company.”
Whether it’s dealing with customer enquiries, improving supply chain processes or boosting their e-commerce presence, small businesses with limited resources and multiple challenges are never going to be able to do everything at once.
Take one target – such as using cloud and automation to reduce a reliance on spreadsheets and paper-based processes – and make it happen.
“Really focus on what you have to do well – technology can help you do those things better, so that you do them quicker. If you’re automating, more people can spend less time on low-value stuff. They can spend more time doing what they need to do to help you grow,” she says.
“And the other big benefit is that, when you automate, you’ll get the information and the reporting that’s going to let you evaluate how the business is doing and you can do the course corrections effectively.”